Public GoodsMechanics, Electricity and Magnetism Level 3
Sue and Pete are playing Prisoner's Dilemma with the payoffs from the table below. If both of them cooperate, each will get a bonus of \(2A\) (the public good), if only one cooperates, each will get \(A\), and if no one cooperates there is no bonus. Sue calculated that Pete will cooperate with probability \(p = 0.3\). What should be the value of the award \(A\) so that Sue is indifferent between cooperating and defecting?